SEBI and Reliance Communications have settled a case against the company for its failure to inform rating agencies about its debt default, for which the market regulator had imposed a fine of ₹62.4 lakh for violation of listing norms.
RCom had failed to inform credit rating agencies that it had missed a non-convertible debenture instalment of ₹375 crore that was due on February 7, 2017.
The settlement order, issued by SEBI’s whole-time members S K Mohanty and Ananta Barua, was put out on the SEBI website on Friday. It did not give details of the settlement, the amount of fine that RCom finally paid, and the reasons that led SEBI to settle the case. However, it said the settlement terms were approved by a high-powered advisory committee.
“The Committee in its meeting held on September 3 considered the settlement terms and recommended the case for settlement upon payment of ₹62,40,000 by the applicant towards settlement charges,” the SEBI order said. SEBI’s whole-time members accepted the Committee’s recommendation and this was communicated to RCom on October 19, it said.
Under SEBI’s settlement process, an entity is allowed to settle charges by paying a penalty without admission or denial of guilt. But under new rules, a settlement cannot be allowed if the violation has a market-wide impact. RCom eventually did make the debenture payment, on April 10, but rating agencies said the delayed payment came to light only when the company announced its March quarter results on May 27. For a rating agency, a delayed payment counts as default. On May 30 last year, rating agencies CARE and ICRA downgraded RCom’s outstanding debt to default status.
Pending an inquiry by SEBI into the issue, ICRA placed RCom under ratings watch, downgrading the ₹5,000-crore NCD programme three notches from its BBB+ status in September 2016s — to BBB, BB and D — through May. Through May, CARE revised its ratings on the NCD issue from A- to BB to D.
Source: The Hindu